1574 - Brian Gray, On Never Selling Grails

Foreign. Doctor James Beckett Sports Card Insights. Thanks Sponsors Tops Panini Upper Deck Heritage Auctions Hugging the Scott Auctions, Mike Stay Sports Cards, Burbank sports cards, compse.com and Beckett Media. Beckett Grading, Beckett Authentication Conversation with Brian Gray. We split it into parts because we got on a roll. And I'm recording this before the national so I can enjoy the week after the national without the pressure of having to put out a podcast three times a week, which I've been doing faithfully for a number of years now. So thanks, Brian. Thanks, listeners. And here it is. We both love to ideate, but the superpower, like for Rob Veres, too, is execution. You gotta be able to pull it off. And whether you need a whole bunch of employees or a few, somehow you gotta be able to get it done, not just have the idea and pontificate. But I'm wondering, in the content creation space, how do you get a spectrum of advice and consideration? Because a lot of These content creators, YouTubers and podcasters are singing in harmony. Hardly anybody's bearish. And the problem is we listen to the five guys that are on there the most. The guys that post every day. Those are the guys we listen to. I think they know the most. The guys that post once a week, we think more of it. I do a podcast sometimes I'll do four, and then I'll do none for three months. And when I have something to say, I'm not scared, I'll just say it. And you don't have to like it, but it's a reality. People need to hear this. I know a fraud that's going on. That's not good. And if I don't share it, and I keep getting inside because I don't want to hurt anyone's feelings or don't want to be ostracized for pointing out something that's not healthy for consumers, that's not good. But at the end of the day, think about who you're listening to more than how often you hear them or how loud they talk, or if they pay to promote their show and Whatnot, or if they have 5 million followers or 100. I don't care if you have 5 million followers or 100 people. The guys that are smart. I know the difference between someone who's regurgitating information, who's trying to make money on YouTube or hear their voice heard, and guys that have original thought that make me think I. I know the difference. And my goal is to be someone who helps people think. Not tell them what to think, but help Them understand how I process information so that they can make their own conclusions. By going through the similar process, people rank media by eyeballs, ears, who's listening, who's watching, how many and all that. But I want to know who the original thinkers are, who have experience. Because most of what you get from Yu-Gi-Oh and most of what you get from the largest content creators, a lot of times rehash. I have 2,000 followers on YouTube. Go listen to my YouTube podcast and tell me if you don't find something in there that makes you think differently. Just think about who you're listening to and maybe that person who only has a thousand only does a podcast once every three months because he doesn't have time, because he's too busy doing things and making things happen. A lot of the guys talking about the industry and are experts have never even run a business in this industry. They're just collectors who know how to do a polished video and can have controversial opinions. They don't know what it's like on the front lines. They've never had to feed their family on this industry. They just don't know what they don't know. That's why I didn't have time to listen to it. What I need five guys to tell me is, is there a world where consumers push back and say, whatever happened to clicky being waxed forever? What are the implications of that long term? Not is this product going to be good or not because of it, or oh, it didn't sell out instantly. That shows there's too many flippers or bots. That's all great, keep saying that stuff. But why don't you think about the guys who say repacks need to disappear. Just think for a second, they disappear. What happens to liquidity? Hasta la vista, baby. We're back to 50, 60%. If repacks go away, be careful what you wish for. But people don't think like that. They go with the headline, oh, repacks are a scam. You don't want repacks, they're junk. Well, guess what? Repacks many times pose a better value than the manufacturer newly released items from a return on equity standpoint. But if that's something that surprised you, that's important. And it doesn't hurt that it does improve liquidity in the market. It makes your collection more sellable. People who don't like repacks should make two edicts. Don't buy repacks and sell every car they own to re packers. Enjoy the great liquidity, but don't support the business on the other end. That's the great answer. If you don't like them, if you like repacks, buy repacks and sell cards, whatever you want to do. Nobody's forcing you. But repacks have a higher expected value but a lower ceiling. Okay, so it's a new top world. Yes, because top secret makes million dollar cards in every product. But old world repacks and have a very high ceiling. Okay, the highest ceiling usually is for the product hit. That is the flag, rookie, debut patch, whatever it is. But one thing you said that I don't think I've ever seen and I don't know that I ever will see is pushback from the consumer. There's never been an organized, hey, this is overpriced. We're just not going to buy this. You've gone too far. Panini or Upper Deck or Tops or Leaf or anybody. I'm sorry, we are just going to say no. Has that ever been pulled off for 60 years? I've been doing this for 40 years. Okay? In those 60 and 40 years, every dealer has had a common goal is to have a good solid industry that can grow, that has support. Yet we've never been able to put together one dealer industry association. We try to associate, but it's failed every time. People who have their entire life's work and all their fortune and all their wealth and their future all tied into something and they can't put together a group collectors outside of small kill the beast with their torches. Outside of that, you're having nothing organized because people who had a really vested interest in huge money at stake can't organize. Consumers spending $200 on a box of tops 2 baseball are not organizing. They're going to just vote with their wallet. And unfortunately those wallets are not moving the needle substantially. The wallets are moved by the big breakers. The wallets are moved by the big collectors who are opening case after case or chasing the biggest cards. That's unfortunate. 90% of the people who buy cards move the needle. 1 per percent of the total movement of the hobby. You know who the most effective lobbyist is in the hobby? Michael Rubin. Because he can, or maybe Mike Mahan. But I'm saying the guys that are in the driver's seat, they are trying to move the culture and they're the ones pushing back. We're not going to do it that way anymore. Pushing back. But the reality is it's a fresh approach. What Ruben and Mahan and that team are doing, you can not like so many things, you can cry monopoly, which you should have cried that 10 years ago when Panini really used it as leverage. You can cry those things. But the reality is, what happened at Fanatics and the way it bled into pop culture is insane. Cards are now featured on CNBC again and all over the place. And TMZ writes articles about the squirrel on the field card. The amount of interest in our industry Fanatics has achieved the first part of their goal, which is increase the addressable market, the number of people that can buy a car. When Ruben said, Let's 10x the hobby, everyone said, that's a dream. We're not going to 10x the amount of money we might. But that was never the goal, I don't think. I think the goal was to increase by 10x the addressable market for cards. We have 300 million people in America and 1 million active card collectors. That can be 10 people that buy a card in the course of a year. That can happen. That's real. Making the money 10 times as much. That's a lot harder. Yu-Gi-Oh The 10x thing, we already now have 10x the amount of publicity that is achieved. Okay. We also have more than 10x the number of athletes directly involved and emotionally involved invested in the hobby. Way more than 10x. The element is we had 10x the number of hobby shops. We have 10x a lot of 30 years ago. 4, 34. The business and continues to grow. The addressable market grows. The number of people issued grows. But I've spent time talking to Michael Rubin personally, just me and him. And you're one of the smartest guys I've ever met in the business. But he is the smartest guy I've ever met in the business. And I like to think I'm very smart. I tried to BS him on something and he caught it right away. And normally I can gauge someone by seeing if they buy it. The guy's the smartest guy I've ever met by 50 miles. He is a dictionary. He's as advertised. I like to think I'm the best because that cockiness has gotten me a long way. He's the smartest guy I've ever met in the industry. He is so smart, but in the right way. Entrepreneurial, visionary. Smart. Not necessarily. Grant Sandground knows everything about every league or Greg Conant leaf. They know everything about every sports event ever and how it plays in the cards. That's a different kind of smart. I'm talking about smart and able to use it to do epic things that Change the world. He's the one. Every collector is in a position to have some expertise somewhere that enables them to see something that other people may not see. Whether you watch sports and you know something about a player because you've seen it, or maybe you've been to so many card shows and watched ebay for so long that you've seen Ben Rice and Ellie de La Cruz and Barry Bonds do not come out of Dynasty. Hardly. When those cards come up, you buy them because there's so few of them. They never come up for sale because they don't come out of the boxes. Let's work 100 cases. People know Barry Bonds out of 100 cases. You should be buying that Barry Bonds if you like Barry Bonds, because that card will end up being an epic card, because it almost doesn't exist. Yu-Gi-Oh but you're telling people they can't do their shortcuts. The long cut is to do your homework and to do your own research. And the abundance of many counselors, not just the person. Megaphone believe you're right, even if it's not popular sometimes. And to be bold. To be bold and decisive. And I've done stuff that people said. I was stupid, and sometimes I really was. But sometimes I was exactly right. Sometimes I was wrong. And I lost money sometimes because I was wrong. But then sometimes I hit the jackpot. And people were shocked. They were like, I can't believe you were the first person to tell me about this. And I was like, I'm not shocked. I Beckett you to buy this because I saw an inequity. I saw an opportunity. And they also remember the time I told them about this because there's an opportunity. It didn't work out. It happens. But I think we just have to have more confidence in ourselves and. And our ability to create a Mosaic. I think that's the best example I can think of. A Mosaic of information, a Mosaic of our learning. Something that all the pieces together are far more valuable than the parts. That's the key. But you got to find your niche. And it's not like a big bubble. I always say, instead of a spotlight, that somebody could take a BB gun and put it out. It's like a bunch of LED lights that are an array. One of the lights gets dim or gets knocked out, but then you still have light from the other one. You go to the national, you've got all kinds of lanes in terms of the sport, the player, the team era, the vintage, all that. That's not me. Naturally too brash. And too aggressive. But I learned how to lie and wait. I learned how to be smart and just serve no one-of-one before it's time. Accumulate. If I really believe in something, just buy. Be confident. Don't be a big deal. Don't go brag about how you're buying every card that's coming up on ebay. If you really believe, you don't have to brag about it. The market will prove you right. They just. They do serve the one-of-one before it's time because they're not connoisseurs. They're not studying the one-of-one market. They're just saying, hey, here's a bottle of one-of-one on the shelf. I'm going to just. They're marketing themselves as one-of-one drinkers instead of the product. They're focusing the drinker of the one-of-one or the critic instead of the actual one-of-one This is about the one-of-one Sometimes. Buy great assets. You'll be very happy. I have T shirts for sale at the National. If you come by my booth that will say, never sell grails. And on the back it says, every sale is a mistake. And that's it. If something is a grail to you, you never sell it because 98% of us will never buy it back when we realize we messed up. And I screwed up on the Wemby green. I bought it for 230, sold it for 516. Three months later. Later, it's 1.4. That was a mistake. I knew it was a ground, it would be a million dollars, and I got scared his knee or ankle would go out, and I blew it. Never sell grails because I should sell every other card I own before these iconic grail cards that truly are the Prizm of the hobby. If I'm an investor, I should sell every other card I own first and only sell those if and when I have no other choice. But instead, we speculate if Kenny Beckett will ever get another shot in the league or Jalen Hurts will ever one-of-one another Zebra Bowl. We're so worried about that. Instead of, Yu-Gi-Oh I didn't hold the Fleer Jordans. How do I not have a Michael Jordan rookie? I love him, and he's iconic, and it's one of the most famous cards of all time. Or 52 male or 51 Bowman male. If you don't want to buy 52. These are cards you should not be selling. You're going to ruin someday. The other T shirt you could do is never be the under bidder on your grail. That's it. It's one thing to sell it. It's another thing to wimp out for one more bidding increment. Now you don't know that. And I've had some where I said one more and suddenly it's eight more. But here's the thing. We're very fortunate about one thing. When you buy a card at a show and you pay way over comms, it's a little dice here because you aren't paying a premium to the market. Substantial. But when you buy in an auction house and you pay that next bid, guess what, you're break even pretty much when you make the next bid because you've set the new comp and because that comp goes on the record, you're now not paying over comps, you're paying the new comp. Yu-Gi-Oh it's like your basis but on grails, people understand why that new comp is higher. The problem is when you buy Jalen hurts National Treasures rookie, which is not a ground, and you pay the next highest. Some people, that's not seen as a positive overpay, that's seen as a not smart buyer overpay. Instead of when you buy a Jordan Kobe dual autograph, people say this guy knows what he's doing. He's buying iconic grail cards. Mr. Wonderful's wearing LeBron around his neck. These guys know what they're doing because they buy big and great cards. Yes. And not necessarily. Sometimes no. Sometimes what they're doing, they're buying great assets. But no, they may not fully get why they're doing it. They're doing it because momentum is on their side. And I'm afraid on grails, momentum is permanent. I think the momentum, unless the country's entire economy goes to the crapper, that's the only risk to these big rails. I see Everything else, who knows? Take a 50 year old guy, a 55 year old guy, a 60 year old guy, so not a young person. Somewhere in there, the respect I have is if somebody's worth $100 million and so they stretch to get a $1 million card, then who knows what's going on there? Okay. But if they've got a $5 million net worth and they decide to cash out their stock portfolio and then buy the million dollar card because they have the same confidence. It doesn't take a lot of courage to pay big prices when it's less than 1% of your net worth. And that's who's setting the market. Many times the best gambles in my life before I sold leave working is like Leaf, where I gamble everything. Then I had. I could go bankrupt or I could hit the jackpot, but I knew I could do it, and it worked. And that's why you just have to believe in yourself. Me, too. It's much better when you have that Mosaic that you built, because now you've got a board of directors built into your heart, built inside you. And that board of directors is going to help you make not necessarily the right decision, but a better, more well thought out, more educated decision. And that's a real fault in the market now, because people don't even think about buying and selling 98% of the time. There's very little thought in the process. Who knows? Great discussion.